Comments from Finance Minister
Push Dollar Lower Against Yen
DOW JONES NEWSWIRES
NEW YORK -- The dollar was weaker Monday, hurt by concern about U.S. corporate accounting and remarks from Japan's finance minister that the dollar is in a decline.
In early trading, the euro was at 98.23 U.S. cents, up from 97.32 cents late Friday in New York. The dollar was at ¥118.81, down sharply from ¥120.37 late Friday in New York.
Over the weekend, Japan's Finance Minister Masajuro Shiokawa said that he believes the dollar is in a downtrend and could fall to its post-Sept. 11 low of ¥115.80.
"I think more time should be given to reach that level," Mr. Shiokawa said, fueling speculation in currency markets about a possible change in the ministry's position. The Ministry of Finance, acting via the Bank of Japan, has intervened on seven occasions since May in an effort to weaken the yen and nurture Japan's nascent export-led recovery.
Some foreign-exchange traders were asking whether that implies a shift of the trading range the Ministry of Finance will tolerate. Although still on high alert for MOF interventions, currency strategists said that they would expect the dollar to gradually weaken further against the yen, to a range not much above ¥115.
"I think it will only be a matter of time until the market moves down toward that level", said David Mozina, head of global fixed income and foreign exchange with Banc of America Securities in New York.
To trigger Bank of Japan intervention Monday, "we would have to eclipse [fall below] ¥118 today to see them come in," said Tim Mazanec, senior currency strategist with Investors Bank & Trust in Boston.
Market sentiment toward the yen was helped by a report that core machinery orders in Japan rose 0.2% last month instead of falling 2.3% as expected.
The euro was charting a strong advance against the dollar as the prevailing negative sentiment toward the greenback held sway even in the face of fairly lackluster euro-zone economic data.
Sluggish economic growth in Germany "has been insufficient to boost employment," part of a flurry of euro-zone economic news that "is hardly the stuff that ought to encourage investors," said Marc Chandler, chief currency strategist with HSBC in New York.
Amid an increasingly vociferous chorus of those who are now convinced the dollar has embarked on a long-term decline, Andrew Crockett, general manager of the Bank for International Settlements, said that the U.S. current account deficit can't remain at current levels indefinitely, making the recent slide in the dollar against other major currencies a welcome adjustment.
The deficit is currently around 4.3% of gross domestic product and is expected to continue rising if foreign investment flows into the U.S. decelerate.
But the dollar's main focus Monday will likely be U.S. stocks, with revelations that pharmaceutical company Merck & Co.'s recorded $12.4 billion in revenue over the past three years that a subsidiary never actually collected.
Also weighing on the U.S. equities markets was news that Reliant Energy and Reliant Resources each restated their revenue for 1999 through 2001 after finding that Reliant Energy had inflated its revenue by $7.8 billion during the period and Reliant Resources by $7.9 billion because of so-called round-trip electricity trades. |
